About nine months before an Auditor
General's report questioned the accuracy of job projections in
tax incentives handed to companies by the state, the Mackinac Center for Public
Policy did its own study highlighting the problem.

On Aug. 31, 2009, the Mackinac Center for Public Policy's
Michael LaFaive and James Hohman reviewed data
from 219 credits from 1995 to 2004 involving the Michigan Economic Growth
Authority.

The MEGA agreements are tax incentives designed to induce
businesses to locate in Michigan. In return for the tax incentives, the
businesses pledge to create new jobs.

The Mackinac Center found company projections of jobs seldom
matched the real-life jobs created. In fact, their investigation of MEGA deals
found that of the 61,043 jobs projected in news releases, companies only
created 17,971 jobs. The Mackinac Center
study states that for every 1,000 jobs companies projected they would create,
about 294 jobs were actually created, on average — about 29 percent.

That report was vindicated by the Auditor General report
that was released April 23. The report looked at company projections from 2005
through 2007 and concluded that about 28 percent of projected jobs came to
fruition.

The Auditor General report stated 184,951 new jobs were
projected while 52,286 were actually created.

"It confirms the fears we had," Hohman said. "The fear was
they weren't really paying attention and that the jobs weren't real and the
state was still giving out credits."

The Mackinac Center's analysis of MEGA's jobs impact didn't
include the "retention credit jobs" which are defined as jobs that
already existed but that were supposedly threatened if the state did not
approve the tax credit.

Hohman said at the time of the Mackinac Center report, the
Michigan Economic Development Corp., which administers MEGA, reporting figures included only one retention credit.

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